The much-touted "Great Wealth Transfer" from Baby Boomers to younger generations may not be the financial windfall many anticipate. While some estimates place Boomer wealth as high as $124 trillion, a recent report from Visa Business and Economic Insights warns of a significant gap between headline figures and actual inheritances.
The Inheritance "Haircut"
Visa likens the situation to winning a lottery jackpot only to see the final check drastically reduced. Of the $93 trillion held by Boomers, Visa estimates that only $36 trillion will actually be passed down. This equates to roughly $515,000 per inheriting household—a figure reached only after accounting for debts, retirement spending, charitable donations, and taxes.
Debt remains a significant hurdle. Despite being the wealthiest generation, 41% of homeowners aged 65 to 79 and 31% of those 80 and older still carry mortgage debt. Other liabilities, such as credit cards, auto loans, and personal loans, further deplete the pool of transferable wealth.
Concentrated Wealth and Limited Spending
The distribution of this wealth is heavily skewed. The bottom 90% of Boomer households hold just $16 trillion of the total wealth. Consequently, nearly 75% of those set to inherit money are already in the top 2%-10% of affluent households. Because this money is moving between wealthy individuals, Visa estimates that $28 trillion will likely be saved or invested, with only $8 trillion used for consumer spending.
Giving While Living
A notable shift is occurring as Boomers choose to support their heirs now rather than later. This "giving while living" trend includes helping Millennial children with home down payments—assistance that about a quarter of Millennial homeowners relied on to qualify for mortgages. Additionally, "skip-generation trips," where grandparents travel exclusively with grandchildren, are becoming increasingly popular as a way to share wealth through experiences.
